Run it profitably

By Alan Bohling, president, Seattle Boat Co.

There was a time in our business here at Seattle Boat Co. (Ranked 16 in 2006) when we did not report profit and loss within individual departments. We looked simply at the whole company without regard to the performance of each department. But we received a shock when we began allocating a proportionate percentage of expenses departmentally. Our service department (technician labor, fiberglass and detail labor only) was running nearly $500,000 in the red each year. We were a $7 million sales and service dealer with a seemingly healthy 2-to-3 week service backlog but were consistently hovering around break even. So solving the service loss became our top priority.

A few other key factors contributed to our change in perspective. Our commodity was the number of hours a technician can collect and at what rate. A discounted rate given to the sales department, or for warranty work, didn’t make sense when retail customers were lined up, willing to pay normal rates. The technician’s billable hours were the key to supporting several other staff, not just themselves, plus the department’s overhead and proportionate corporate expenses. We looked at the department in reverse by determining our total expenses, and then by adding a reasonable net profit to determine our service department revenue goal.

Although it didn’t happen overnight, we slowly changed our technician pay plans to incorporate a “flat-rate bonus.” Flat rates are determined by normal allowable time per service job, as reported in flat-rate manual resources, such as Spader, Mercruiser, Volvo, etc. We made every effort to support our technicians so that every minute of their time was productive. We measured the technician’s punch card versus billed hours for efficiency every day and posted them next to the time clock. We provided tool bonus incentives for reaching certain levels of efficiency at month’s end. The results of these efforts began paying off.

We continued to evolve and improve the process. We reviewed other dealers’ methods of operation. At each salary review period, we added wage benefits to the flat-rate bonus rather than base wages. Each off-season, we meet as a team to brainstorm definable goals and strategies to reach them. Key procedures today include:

  • Measuring turn times – the number of days a boat stays in the service yard from drop off to pick-up
  • Customer satisfaction – immediate report from the customer regarding three critical factors; Was the boat fixed right the first time? – Was it easy to schedule? – Was it finished when promised?
  • Clearly understandable flat-rate hours – reported on the technician job cards for each job before the work begins
  • Pre-prepared parts bins for all standardized jobs – completed the night before for each technician
  • Boat staging load sheets – completed and arranged the night before
  • Special order parts – ordered in advance of the scheduled service
  • Valet pick-up and delivery – expedite movement of the boats to prevent customer schedules from interfering
  • Comeback reporting – logging any work that was incomplete or faulty
  • Mobile marine service – regularly scheduled on-water service adds additional revenue stream
  • Same-day service – our goal is to achieve 10 percent of all service boats scheduled and completed in one day
  • Proactive scheduling – contacting customers and scheduling before peak periods
  • Weekly revenue cash receipts goals
  • Visually shared schedule – available on the companywide server for all sales, service and marina staff to view
  • Minimal back log – Goal to not exceed one week service back log
  • Spring customer gift pack – special complementary gift set on the driver’s seat of each completed service boat.
    • To explore more Service Department Best Practices, click here.
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